How Will NC's Broad Tax Proposal Affect Your Overall Financial Situation?

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You’ve probably heard the old saying about nothing being certain except death and taxes? Well, the taxes are unfortunately looking a bit more certain for the low- and middle-class citizens of North Carolina. A new tax proposal in the state seeks to use a sales tax to eliminate income taxes in North Carolina. If approved, the new tax plan would give a sizeable break to the wealthiest 20 percent of taxpayers, while forcing the less fortunate to pay more.

The state of North Carolina has already raised all three major state taxes (sales, income and corporate) this year. When you compare that to other southern states, no one else has even raised one major tax as of yet. The only other state tax increase which compares to NC’s is Florida, who added about $1.2 billion in new taxes and another billion of increased vehicle registration fees. Keep in mind, however, Florida has no income tax. North Carolina lawmakers say the massive tax increases were implemented to help balance the state’s budget.

Large increases like these don’t do anything to help the state’s overall competitiveness and they certainly don’t do anything to help put money back in your wallet. In fact, according to the Tax Foundation, North Carolina’s business outlook already ranks a sad 39^th in the nation. Adding to the problem, the Small Business & Entrepreneurship Council ranks North Carolina 39th when it comes to entrepreneur-friendly policy environments, the lowest ranking state in the Southeast.

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Looking at all the data and low rankings for the state, the tax increases would essentially discourage any new businesses from opening in North Carolina. This means fewer job opportunities for NC citizens across the board. Instead of encouraging new business growth, the taxes actually bring growth to a screeching halt.

The new tax plan is quite appealing to the wealthiest North Carolinians, but extremely dangerous to the low- and middle-class households. For example, let’s say you are a NC family earning around $24,000 a year. Under this new plan, you would see your taxes increase by at least $500 a year. On the other hand, if you are a millionaire, you would actually receive a tax break of $41,000. And how is that tax cut for the wealthy being funded? Well, their tax burden is being shifted onto 60 percent of the state’s taxpayers, or the middle- to low-class working families.

In monetary groups that are still in post-recession recovery mode, how does it make sense to place additional tax burdens on the very people who face problems paying their bills on time each month? Thousands of North Carolina families are currently struggling with millions of dollars in credit card debt, on the verge of losing a home to foreclosure or drowning in medical debts. Adding more tax debt to the equation will only result in more financial difficulties.

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Learning from past mistakes is crucial for policymakers to move North Carolina forward in a positive manner. However, the state past policies have often ended up doing more harm than good. Hurting the state’s economic competitiveness and working families will only put NC further behind.

For example, hundreds of North Carolina realtors have started their own opposition campaign online, warning others of the potential dangers and overall costs of the proposed tax reform. One of the online commercials they created states, "Imagine selling your home and being forced to pay an 8 percent tax to the Realtor, an 8 percent tax to the attorney and an 8 percent tax to the appraiser."

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Chris Fitzsimon, director of N.C. Policy Watch, has openly criticized the tax proposal. He says he is afraid that using a sales tax to eliminate income taxes will do nothing but shift the tax burden in North Carolina to the poorest residents.

"The politics of this are incredibly complicated," Fitzsimon said. "The devil in every piece of legislation is in the details. Here, the devil is overwhelming."

For those North Carolina families who are already struggling with enormous amounts of debt, you may want to consider speaking with a local NC bankruptcy attorney. Seeking bankruptcy protection is always a better option than doing nothing at all and an experienced North Carolina bankruptcy lawyer can show you how a Chapter 7 or Chapter 13 bankruptcy can benefit your unique situation.

Dedicated to helping residents of North Carolina find the best solutions to their debt problems. Don’t waste another day worrying about your debt. Call +1-833-627-0115 today to schedule a free initial consultation to discuss your bankruptcy options.